Energy Trading – An Overview

The energy-trading industry has evolved with extreme rapidity in recent years, as companies have chosen their preferred strategic positions and then focused on building out their geographic and market presence.

Amid intense competition, there have been high levels of investment in trading units and technology platforms, often with the profit-driven front office calling the shots.

One consequence has been a proliferation of systems and processes, sometimes at the expense of efficiency.

New ways of looking at the energy-trading business are now challenging this model. Energy-trading companies face a changing regulatory environment, including the introduction of mandatory over-the-counter (OTC) clearing and thus higher capital requirements under European Market Infrastructure Regulation. The competitive landscape is also evolving rapidly—for example, new entrants have proliferated in commodity trading.